Israeli-Palestinian talks have been at a standstill, but US President Donald Trump had pledged to revive talks, with the US acting as a mediator in the process.

Last week, Trump's decision to recognise Jerusalem as Israel's capital, while planning to move the US Embassy from Tel Aviv to Jerusalem, prompted Palestinian President Mahmoud Abbas to "disqualify" the US to act as a mediator in future talks.

Saudi Arabia's King Salman bin Abdulaziz Al Saud has reiterated the kingdom's stated commitment to a Palestinian state with East Jerusalem as its capital.

This has been the kingdom's official position on Trump's decision. The US move triggered a wave of protests from the Arab and Islamic world.

However, according to a Reuters news agency report, Mohammed bin Salman is said to be acting on behalf of senior White House advisor Jared Kushner, and has presented Abbas with an American plan for Middle East peace.

Though Saudi Arabia does not officially maintain diplomatic ties with Israel, recent developments appeared to have pushed Riyadh and Tel Aviv closer together.

Analysts have said the covert ties between the two countries are based on the "common threat" of Iran and are part of a new regional dynamic.

Iranian proxy

Katz, who expressed his plans to lead Israel's right-wing Likud government in the future, said that Israel would act to prevent Iranian presence in Lebanon, which is home to the Shia Hezbollah movement.

In reference to Hezbollah, Katz said that his country could "return Lebanon to the stone age" should Hezbollah decide to attack Israel from over its borders. He added that Israel possesses information that proves Iran is assisting Hezbollah in manufacturing arms in Lebanon.

"The more accurate that Hezbollah's missiles get, the stronger and wider Israel's strike will be. This time, all of Lebanon will be a target," he said. "As is happening with Syria."

In October, cross-border violence between Israel and Syria set off an exchange of heated threats between the two sides. They traded blame when Israel attacked Syrian artillery, claiming it was responding to what may have been errant rocket fire that landed the Israeli-occupied Golan Heights.

Katz added that in discussions with the French President Emmanuel Macron and the European Union, it was agreed that if necessary "military force against Hezbollah could be used particularly at this time," referencing Lebanon's Prime Minister Saad al-Hariri's halted resignation.

"The Arab League considers Hezbollah as a terrorist organisation," he said, adding that this would help Israel in a decision to attack, if necessary.

'Golden opportunity'

Katz also talked of a railway proposal that would connect Israel's port city of Haifa to the Arabian Gulf.

"This is not a dream at all. This could become a reality very soon," he said.

The project proposes a shorter and cheaper route to transfer goods from Europe and the Americas, said Katz, as a railway would extend from Israel through King Hussein Bridge crossing with Jordan.

"The Jordanians would then go on to extend that from the northern town of Irbid, all the way to the Saudi border," he added. "This is what we propose to the Gulf."

Katz concluded the interview by drawing attention to "Iranian influence" in the region once again. Despite Iran's "interference to destabilise the region", Katz pointed to the railway project as an opportunity to achieve lasting peace.

"It is important for Saudi Arabia to join the peace efforts and lead the way for peace by promoting such significant economic projects. Also to form a strategic alliance with the United States in the face of Iranian extremism and terrorism," he said.